Skip to main content

5 TIPS THAT WILL HELP YOU IN GETTING THE MOST OUT OF YOUR INSURANCE SAVINGS PLAN




Thing is insurance savings plans are not for everyone. There must be an objective when you want to commit to one. In my experience, some of my clients had some bad experiences because they were approached by b@nkers on the promise that the savings plans the b@nks issued were purely investment plans with no insurance coverage. So when the customers sign up, they are often surprised how come the investment was linked to ABCD insurance company and then they feel duped. I don’t blame you. So, before you commit to a savings plan. These are the top 5 things you need to know before you sign on the dotted line.


#1 WHAT IS YOUR OBJECTIVE?

Everyone wants to save money, in fact, ppl prefer to buy a savings plan rather than a protection plan….. So whenever a client/ prospect hears of a savings plan, they lit up and asked for proposals. But I will always ask them what is your objective?… some will say save for emergencies, some save for their retirement, some save for their vacation, or kids edu. Or even some..save for nothing… They just like to see the numbers in their bank…. And console themselves because they had splurge on a recent 8.8 sale… (talking about myself) HAHA!


So whichever is your objective, you need to have an end goal when you begin a savings plan. How much do you anticipate to receive after a certain time, or if you want a yearly payout?


Endowment plans are fantastic if you’re planning to save for a long term goal such as kids edu, legacy or retirement. I love using savings plans as a tool for retirement planning (I’m crazy detailed in that way, maybe due to my precision for detail i got from baking, i will measure right to the dot and use the ingredients as per instructed.)


Because I feel retirement is the loooooooongestttttt vacation ever and we need to make sure we have money for that. Can you imagine going for a 7D 6N holiday locally with RM500 in your pocket? You cringe at the thought right? So yea, retirement is like going away from work for the next 20-30YRS! That’s like 10,950 days of holiday. The last thing you want to think about in your middle of your vacation aka retirement is money and returning back to the workforce. So we need to plan for it. With my years of experience, I’ve helped design personalized, unique retirement strategies for my clients. We have penned out a steady income stream of GUARANTEED yearly payout of RM50,000 - RM150,000 throughout their retirement. Now, that’s a good use of a savings plan which will work for a retirement strategy.


#2 HOW MANY TYPES OF SAVING PLANS ARE THERE?

I have to emphasize this insurance savings plan is not for emergency use. So make sure you create that in your M2U goal settings. Yearly big ticket items such as car insurance/ road tax/ memberships/ income tax/ yearly medical check ups tend to leave a dent on the particular month when it comes so you want to get ready for that.


So, back to our question, there are 3 types of savings plans you need to know. And there’s no perfect plan so you need to know which to use at a certain point to make the best out of the plan.


Types of savings plans

Pros

Cons

Investment linked Policy (ILP) - Investment portion

1.It’s flexible, you can choose to put it in on a monthly basis or a 1 time basis; 


2. commission rate for agents is only marked at 3%; So most you get to buy more units


3.You can select your funds; 


4. You can also make a flexible withdrawal at any time provided there’s a min. balance you need adhere to so you still get to enjoy the other benefits in the policy.


5. You can add-on payor feature


6. You can choose to stop saving at any point and it won’t affect your capital (subject to the market trend)

1.You have to self monitor on the growth rate by selecting the suitable funds, you have the option to switches funds 


2. the withdrawal of fund may affect the sustainability of your policy coverage


3. No additional coverage as this is purely to build cash value/ savings

Endowment Plans 

1.It’s structured to a fixed term of 15, 20,25,30 or 40yrs.


2. You have a choice of short term premium term of 5yrs. 


3. you can view the guaranteed and non guaranteed chart to make a better planning; 


4. the premiums doesn’t fluctuates;


5. you can get a discount when you make a lump sum payment; 


6. You can add-on payor 


7. Your loved ones get to enjoy the guaranteed payout when you are no longer around

1.You can only withdraw the yearly payout and not more than what was set in the contract


2. You cannot modify the term and you cannot top up or downgrade the plans; 


3. You may lose your capital if you surrender before the term ends; 


4. you cannot select the funds as it is preselected.


5. You need to wait for the term to mature in order to enjoy the full benefit (Min. 15yrs)


6. Low basic coverage

Single Premium 

1.It’s a one time premium payment term; 


2. Some plans give yearly payout and a maturity payout when the term ends. 


3. There’s a projection on guaranteed and non guaranteed scenarios; 


4. in some plans, you can select the funds.


5. Guaranteed amount is usually 125% of your premium

1.You may lose your capital if you surrender before the term ends;


2. in some plans you cannot select the funds.


3. Low basic coverage



#3 ARE SAVING PLANS CONSIDERED AS INVESTMENT PLANS SUCH AS SHARES/ UNIT TRUST/ P2P LENDING/ GOLD/ ASB AND ETC?

In CFP terms, savings plans are not considered as investment plans but are considered as fantastic tools for retirement planning because of the guaranteed payout during retirement. 


Robert Kiyosaki said in his book Guide to Investing, he said:-

“There are many types of vehicle for different use and function. So that’s why investment products are often called investment vehicles. There are many different investment products because there are many different ppl with many different needs, just as a family with 5 children has different needs than a single person or a farmer.


All a vehicle does is get you from Point A to Point B. An investment product or vehicle simply takes you from where you are financially to where you want to be sometime in the future - financially.


Investing is like planning a trip - using different types of vehicle to get you to the destination. Not one is not necessarily better than the other. Example, if we want to go Bangkok from KL with a cruise, first we need to use our car to get to the jetty, take the cruise and stop at Phuket, then we may get to a tuk-tuk to go around shopping and get a cab to the airport to catch plane to Bangkok and again for sight seeing, we may use a tuk tuk or a cab to get around, and at the end of the trip, we take a train back to KL. So in total, we have used 5 different types of vehicle to get complete our journey.


A true investor does not become attached to the vehicles and procedures. You don’t need to “fall in love” with the investment vehicle, you just use it for your goal.”

Some ppl like to use non insurance products and some just want to use insurance savings plans. So don’t need to judge and be harsh at ppl’s choices. At the end of the day, all these vehicles are just tools to help one get them to their goal/ destination.


So having said that, insurance savings plans /shares/ crypto/ p2p lending are different tools of investment vehicles you can choose to reach your goal.


#4 AS AN AGENT, DO I ALSO BUY THESE SAVINGS PLANS?

Yes, I do! I bought a savings plan even before I was an insurance agent. Even my dad thought he bought a savings plan for us back in the 90’s but found out it wasn’t, I’ll tell you more in a separate post. So anyways, I bought an edu savings plan from a bank for my first child when she was born, because I know education fees are going to be very expensive if I don’t save today! Along the way, I topped up her ILP and got another insurance savings plan. 


Personally, I also use these savings plans as my retirement strategy because I love the fact that I can see the projections in the future so I know what to expect. I don’t like manual guesses and assumptions. HAHA!… And after I’ve laid out the foundation only then I can explore and learn other ad-hoc investments such as P2P lending/ crypto without worry whether is my retirement fund sufficient or not.


#5 WHAT IS THE COMMISSION RATE DOES AGENTS GET FROM SAVINGS PLANS?

To find out more about this, you can read my post here 


Do check out my FB and website

www.victoria-lim.com

Https://victoria-lim.planyourfuture.today

Labels:

Comments

Post a Comment

Popular posts from this blog

TOP 5 QUESTIONS YOU SHOULD ASK YOUR AGENT BEFORE BUYING A POLICY

Inspired by KC Low’s YouTube posting on the same topic and writing this from an agent point of view :) And everyone knows buying a policy is a long term commitment and these are top 5 questions you should ask your agent before buying a policy. #1 WHAT TYPES OF INSURANCE ARE AVAILABLE? There are 4 types of insurance coverage, and they are: 1️⃣ YOU DIE, I PAY refers to LIFE INSURANCE coverage 2️⃣ YOU FALL SICK, I PAY refers to CRITICAL ILLNESS benefit and/or MEDICAL CARD 3️⃣ YOU RETIRE, I PAY refers to RETIREMENT FUND 4️⃣ YOUR KIDS GO COLLEGE, I PAY refers to KIDS EDUCATION FUND #2 HOW MUCH COVERAGE SHOULD I BUY? There’s a few ways of calculating how much coverage a person needs. The coverage depends on your current salary. The simplest way to gauge is like how a doc would advise you how many glasses of water you need to drink daily: 7 - 8 glasses of water.  Likewise in insurance coverage, the simplest way of calculation for the types of coverage you need. So if you are earning RM...
Post a Comment
Read more

5 REASONS WHY MEDICAL CLAIMS ARE REJECTED

#1 YOU DIDN'T HAVE THE ORIGINAL DOCUMENTATION 🤭 Insurance companies will always require these documents and they are:- Claim form Original receipt Original invoice/ breakdown of items Medical Report (sometimes may not required if it’s a follow-up consultation) If you’re unable to provide item #a to #c, they may not honor the claim. #2 YOU DIDN’T GET PAID 😡 Insurance companies will only pay to the policy holder’s account regardless of who pays the bill. And if a child is parked under a parent name, be sure to have the other spouse registered as a “contingency assurance” in case one of the parents passes away, the parent still can get their claims. #3 YOU DIDN’T KNOW WHAT ARE NOT COVERED 😓 Items that are not covered in a hospitalization claims are:- Medical Report Supplements Medication that is out of scope of your admission (For example, I had a client who did a stent for his heart, and because of his sugar level, the doc also changed his diabetic meds, so the diabetic meds wasn’...
Post a Comment
Read more